Last week, we got news that was disappointing for many frequent travelers, especially those frequenting domestic routes in the US. My first encounter with Southwest was a student in business school in 2008. Back then, the flight prices and schedules were just perfect for me. I could avoid driving and simply fly between Phoenix and back home to San Diego. Well, all good things come to an end and one of Southwest airlines’ key feature is on the chopping block.
Southwest Airlines doing away with checked bags
The Southwest brand has been built on an edifice of family-friendly and fun loving base, focusing on making things smooth and easy. The brand was backed by solid tangible features. Firstly, there was open seating, which is also going away. Secondly, two checked bags were free, which is also going away. Now how will this impact the Southwest brand? I fear that the damage could be severe as the airline loses its core point of differentiation.
Southwest Airlines: Repercussions for the brand
This paper by Martensen and Gronholdt puts some light on what could be ahead for Southwest. In my opinion, the airline market is extremely crowded. Up until now, Southwest enjoyed two points of differentiation in a crowded market. Now what happens when those competitive advantages go away? A brand can take really long to build a competitive advantage in a crowded market, but as you see in Southwest’s case, it can lose it very quickly.
Here’s a quick analysis based on Martensen’s and Gronholdt’s framework.
Brand differentiation and superiority
The brand should differentiate itself from its competitors and offer the market something unique (Q13, Q15). However, the differences should be perceived as meaningful for the consumer. Keller (2003, p. 4) believes that these differences can be rational and tangible – related to the product performance of the brand – or more symbolic, emotional and intangible – relat- ed to what the brand represents.
In case of Southwest, the differences were indeed meaningful and tangible. What will Southwest replace them with? More importantly, will they be perceived as meaningful?
Unlike a product brand, a corporate brand makes it possible for a company to position itself in the minds of the consumers with a broader and more varied image than usually possible through the product itself. As Keller (2000, p. 115) puts it: “a corporate brand is distinct from a product brand in that it can encompass a much wider range of associations. A corporate brand thus is a powerful means for firms to express themselves in a way that is not tied into their specific products or services”.
Associations created based on the company’s culture, core values and strategies express that which makes the company unique and special, which may then serve as the point of departure for differentiation (Q14). Aaker (1996a, p.115) puts it as follows: “The basic premise is that it takes an organisation with a particular set of values, culture, people, programs, and assets/skills to deliver a product or service. These organizational characteristics can provide a basis for differentiation, a value proposition and a costumer relationship…” Taking its core values and strategies as the point of departure, a company may thus create associations that make the consumer experience an extra emotional value in addition to the more functional attributes (Q14).
If you look at it from a branding perspective, Southwest stood for flexibility and a family friendly vibe. Why? Flexibility meant you could choose seats upon boarding. The family friendly vibe meant that you could travel in larger groups with family without having to pay for bags.
The framework by Martensen and Gronholdt is instructive as it studies the correlation between brand loyalty and specific brand features. It shows how impactful both functional and emotional features are in building and maintaining customer brand loyalty. From a functional perspective though, there’s a feature that can still keep customers captive despite the negative changes by Southwest. I used the word ‘captive’ on purpose as it refers to hub captives. If you live in a Southwest hub and have to travel on a specific day and time, you have very few options.
The Pundit’s Mantra
For a long time, Southwest has enjoyed a unique differentiated position in the airline market, thanks to unique features that cemented a niche for them in the market.
Now that those features are going to be away, customers are bound to feel shortchanged. When they feel shortchanged, they immediately start looking for other options. I mentioned at the outset that in a crowded market where brands are often similar to each other, a point of differentiation can build long term brand equity and customer loyalty.
In case of Southwest, their key point of differentiation is no longer going to be there. However, that crowded market still exist. No pun intended, but I foresee some turbulence ahead for Southwest vis-a-vis its loyal customers.
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You said “Southwest Airlines doing away with checked bags”. No. They are doing away with FREE checked bags. A big difference. 😉
Good article.
My thoughts are that the loyalty of the WN “die-hards” became too expensive for WN to continue pursuing. It was worth it back when WN was in a mode of rapid expansion and was more leisure focused. Now, it’s the largest domestic carrier in the US. They no longer need to cater to “die-hards” or leisure travelers. They will obtain a “natural market share” on any given route so long as they are competitive. Few domestic travelers need two checked bags, and many don’t like not knowing where they’ll sit until they physically claim the seat.
Most travelers are free agents. They are not loyal. They buy based upon price, routing, and schedule. I think WN’s changes will allow them to better compete on that basis. In my past experience, more often than not, WN has been more expensive than competitors on a given itinerary. Having to price in the possibility of two 50lb checked bags is probably a big factor there.
So my very simple, non-scientific view is that yes, WN loyalists will be mad about the changes. But they’ll still fly WN when it makes economic sense to do so, and far more people who didn’t often fly WN before will begin to do so for the same reason.